EC lays out strategies to reduce climate change protection gap

Recommendations on how to reduce the protection gap caused by climate change have been set out in a report by the Climate Resilience Dialogue, an initiative launched by the European Commission in 2021 to discuss ways to narrow the climate protection gap and increase the resilience of the economies and societies.

The report acknowledges that natural catastrophes caused by climate change are becoming increasingly intense and frequent, but notes that only around 25% of climate change-related losses are covered by insurance across Europe, albeit with big differences between countries.

According to the report, analysis of the drivers of the climate protection gap has shown that one of its contributing factors is low risk awareness. It says this is often related to insufficient access to relevant information on risks and on risk prevention measures. “Developing accessible tools that provide consumers with first-hand, clear, and easily understandable information on the risks they are facing, as well as on the risk-reduction measures they could implement, can be helpful in increasing risk awareness levels, climate resilience and preparedness,” says the report.

It adds: “Data availability is crucial to perform proper risk assessments and to measure historical, current, and future climate protection gaps. Risk assessments based on robust, easily available, and accessible data can help identify hazards, evaluate risks, support the pricing of insurance products, and inform the most suitable risk-reduction measures to take.”

And the report stresses: “While insurance is pivotal in securing resilience and coping capacity, it is also important to look at other factors, such as climate adaptation, since the ability of insurers to cover for damages caused by climate-related events will increasingly depend on strong and effective adaptation measures that can improve insurability. Investments in climate resilience and adaptation and the implementation of risk reduction measures are a pre-condition of insurability.”

In the report, the Climate Resilience Dialogue puts forward a summary of actions, including:

• Further developing tailored approaches to resilience.
• Regularly reviewing and updating hazard maps, and continuing to integrate hazard information and hazard maps into planning, zoning and permitting processes.
• Enhancing and promoting public awareness, education and behavioural change vis-a-vis climate-related risks.
• Ensuring proper risk assessments.
• Better coordinating emergency response and recovery efforts.
• Exploring the potential for public-private partnerships.

Nicolas Jeanmart from Insurance Europe, who acts as co-rapporteur of the report, says: “Besides being a huge challenge for our societies, climate change is also threatening the insurance industry’s critical role in providing protection. If the industry is to continue to offer broad, affordable insurance, we must both radically cut greenhouse gas emissions and strengthen resilience in our communities. Bringing together (re)insurers, consumers, businesses, and policymakers together, to listen, learn and offer concrete solutions, is one of the ways forward.”